Agreement for sale of invention
The agreement for sale of patents as mentioned in this agreement should be properly drafted in consultation with the patents agents so that the said agreement may contain a complete specification of the invention which will be filed with the office of the Registrar of patents.
Consideration for sale
The amount invested in the sale of invention can be partly paid in cash and partly by allotment of shares or fully by cash or fully by allotment of shares or fully by cash or fully by allotment of shares of the new company. Consider in advance the mode of payment for the sale of the invention keeping in mind the tax implication of the vendor.
Filling with the ROC:
If shares are allotted partly or fully in consideration of the sale of invention then the copy of contract, duly stamped, pursuant to which the securities have been allotted or return of allotment, as the case may be, shall be filed electronically with the Registrar of Companies in Form PAS-3 within 30 days as per section 39(4) read with Section 12 of the Companies Rules (Prospectus and Allotment of Securities), 2014.
Before entering into this agreement, provisions of the statutes on intellectual property should be referred to so that the intricacies of those rights are kept in mind while preparing this agreement.
Immediately after the incorporation of the company this agreement should be adopted by the first Board Meeting held after such incorporation so that all the clauses of this agreement are properly adhered to.
This agreement is made the day of 2017 (Two Thousand and Seventeen) between Mr. ABC resident of being the inventor or creator and Mr.DEF resident of being the financier (hereinafter jointly referred to as ‘the parties’). Whereas Mr. ABC claims to be the true and first inventor or creator of an improvement in Enterprise resource Planning (ERP) or in the method of Communications or in the process of bottling of distilled water and has made an application to the Patents Authorities under the Patents Act (hereinafter referred to as the application) vide application No. 1578 dated day of 2017 (Two Thousand Seventeen) (herein after referred to as the invention or creation) and has filed a provisional specification of the invention or creation with such application; And whereas the parties hereto have agreed to form a company to acquire the benefit of the invention and the application and to exploit the invention.
- Mr. ABC shall forthwith procure the incorporation of a private company which is limited by shares (hereinafter referred to as ‘the company’) under the 2013 Act, (hereinafter referred to as ‘the Act’) having an authorized share capital of Rs. 5, 00,000 (five lakh rupees) divided into thirty thousand equity shares of Rs. 10 (Rupees ten) each with differential rights as to dividend, voting or otherwise.
- The company shall be called ‘A.D.G. Company Private Limited’ or ‘B.E.H. Company Private Limited’ or ‘C.F.I. Company Private Limited’ or ‘PQR and Company Private Limited’, whichever name is made available by the Registrar or if the Registrar does not make any of the above names, available, by such other name as may be agreed between the parties hereto or in default of such agreement as one of the Registrar.
- The memorandum and articles of association of the company shall be in the form as devised by the parties after discussion and deliberation and as provided under the Act and shall be a proof attached hereto and marked as ‘A’, with such modifications or alterations as the parties hereto may agree in writing.
- The memorandum and articles of association shall be subscribed equally by the parties hereto or their respective authorized representatives each of whom shall agree in the memorandum to take up 5,000 (five thousand) equity shares of Rs. 10 (Rupees ten) each with voting rights in the share capital of the company mentioned above.
- Mr. ABC of the first part and Mr. DEF of the second part shall be the first directors of the company immediately after incorporation and company registration. Thereafter, the directors of the company shall be appointed as per the provisions of the Act. So long as any of the above mentioned parties hereto is entitled to be a director of the company, each one of them will exercise his voting right for the particular time in the company and take such other essential steps as lie within his power to procure that the maximum number of directors of the company shall not exceed fifteen that may further be increased by passing a special resolution.
- Immediately after incorporation of the company, Mr. DEF will make an application in writing to the company for allotment of 5,000 (Five thousand) equity shares of Rs.10 (Rupees ten) each in the share capital of the company in cash at par upon terms that such shares will be payable in full on allotment and not later. The said application for shares shall be conditional upon Mr. ABC and the company entering in to the sale agreement hereinafter mentioned within 10 days after incorporation of the company but shall otherwise be unconditional and Mr.DEF shall not withdraw his application for the equity shares as stated above.
- Each parties hereto shall take such steps as shall from time to time lie within his power to procure that as soon as possible and in any case within 10 (ten) days after the incorporation of the company Mr. ABC and the company shall enter into an agreement (hereinafter referred to as ‘the sale agreement’) for the sale to the company of the full benefit of the invention or the creation and the application and a service agreement (hereinafter referred to as ‘the service agreement’) such agreements to be in the form of the drafts annexed hereto and marked respectively as ‘B’ and ‘C’, with any such modification as the parties hereto may agree in writing.
- Each of the parties hereto will also take such steps as shall from time-to-time lie within his power to procure that within 10 (ten) days after the incorporation of the company, it shall allot the shares to be allotted to Mr. ABC pursuant to the sale agreement and the shares applied for by Mr. DEF in accordance with the provisions of paragraph 6 above.
- Each of the parties hereto will further take such steps as shall from time-to-time lie within his power to procure that the company shall bear all the costs, fees and expenses whether incurred before or after the date hereof respectively of Messrs XYZ and company, advocates, solicitors and consultants and also of Messrs POQ and Company, the Patent Agents in relation to the application, the preparation of this agreement , the formation of the company and the preparation of the sale agreement and also the service agreement.
- Each parties hereto will, in addition to above, take such steps as shall from time-to-time lie within his power to procure that the company shall perform and observe the provisions of this agreement, which the company would be liable to perform and observe if it had been incorporated prior to the date hereof and had joined in this agreement.
- Subject to the provisions hereinafter mentioned below in subsequent paragraphs, Mr. DEF will advance to the company, on the terms specified in paragraph 17 hereof or will procure the advance to the company on such terms as may be agreed between the parties, all sums of money required by the company for the purpose of its business in addition to the moneys subscribed for shares of the company.
- Mr. DEF shall also not to oblige to advance or to procure the advance of any sum of money until he has been allotted the shares applied for by him to the company pursuant to paragraph 6 above.
- Mr. DEF shall also not be obliged to advance or to procure the advance of sums of money which exceed in the agreement Rs.5,00,000 (Rupees five lakhs) or such larger amount as the parties hereto may agree in writing from time-to-time and Mr. DEF shall also provide a declaration in writing to the effect that the advance is not being given out of the funds acquired by him by borrowing or accepting loans or deposits from others.
- Mr. DEF shall further not be obliged to advance in any one calendar month or to procure the advance in any one calendar month of more than Rs. 1,00,000 (Rupees one lakh) or such larger amount as the parties may hereto agree from time-to-time with the declaration as provided in paragraph 13.
- Mr. DEF shall be entitled to serve upon each of Mr. ABC and the company a notice in writing, determining Mr.DEF’s obligation to advance or to procure the advance of moneys pursuant to this paragraph, if there shall occur any event which would in accordance with the provisions of paragraph 18 hereof render immediately repayable the outstanding amount of any advances made or procured by Mr. DEF pursuant to this paragraph.
- Mr. DEF shall be entitled to serve upon each of Mr. ABC and the company a notice in writing, determining Mr.DEF’s obligation to advance or to procure the advance of moneys pursuant to this paragraph, if the application is abandoned or finally refused or the letters patent is not granted pursuant to the application on or before the day of 2017 or such later date as the parties hereto may from time-to-time agree.
- Mr. DEF shall be entitled to serve upon each of Mr. ABC and the company a notice in writing, determining Mr. DEF’s obligation to advance or to procure the advance of moneys pursuant to this paragraph, if the company fails or neglects within 10 weeks of being requested so to do by Mr. DEF, pursuant to the provisions of paragraph 19 hereof, to instruct the counsel to advise on the validity of any letters patent granted pursuant to the application.
- Mr. DEF shall be entitled to serve upon cash or Mr. ABC and the company a notice in writing, determining Mr.DEF’s obligation to advance or to procure the advance of moneys pursuant to this paragraph, if the counsel instructed in accordance with the provisions of paragraph 20 hereof expresses an opinion adverse to the validity of such letters patent.
- Mr. DEF will immediately after incorporation of a company or on a day as the parties may agree in writing advance to the company the sum of Rs. 2,50,000 or such amount as may be agreed upon in writing, free of interest, which will be repaid by the company within a year of operation or upon the earlier happening of any of the following events:
- The service on the company of a notice signed by both parties hereto requesting immediate payment;
- The passing of a resolution or the making of an order for the winding-up of the company;
- The appointment of receiver of all or any of the assets of the company;
- The company being in arrears for more than six months in payment of any advance made to in pursuant to this agreement.
- Immediately after letters patent is granted by the Patents’ Authorities pursuant to the application made by them, Mr. DEF shall be entitled, by notice in writing to Mr. ABC and also the company, to require the company to obtain the opinion of the counsel as to the validity of such letters patent.
- If Mr. DEF serves a notice on Mr. ABC and the company in accordance with the provisions of paragraph 11 hereof determining the obligation of Mr. DEF to make or procure any advance or further advance to the company, Mr. ABC shall entitled to serve upon Mr. DEF within two months of such determination a notice in writing requiring Mr. DEF to sell to Mr. ABC at the price prescribed in paragraph 24 below all Mr. DEF’s shares in share capital of the company made or procured by Mr. DEF pursuant to the provisions of paragraph 11 hereof.
- Any sale pursuant to any such notices of shares in the share capital of the company and of the benefit of all advances made to the company as aforesaid shall be completed upon such date as shall be specified in the notice served by Mr. ABC pursuant to this paragraph being not less than ten days or more than thirty days after the service of such notice.
- The sale price of such shares shall be their par value and the sale price of such advances shall be the outstanding amount thereof plus amount of the all unpaid interest which has accrued thereon up to the date of completion of the sale less income tax at the standard rate for the time being in force on the amount of such interest.
- Each of the parties hereto shall comply with the requirements of any such notice and for the purpose of this paragraph, this shall deem to be the essence of the contract.
- Nothing herein contained shall in any way affect the free exercise by any person of his powers as a director of the company.
- The provisions of this agreement shall be governed by and construed in accordance with the Indian law and the courts at Delhi shall have exclusive jurisdiction in respect of any matter arising out of this agreement.
- Any dispute, controversy, or claims arising out of or relating to the present agreement, or breach, termination or invalidity thereof shall be settled by arbitrator in accordance with the provisions and regulations of the Indian Arbitration and Conciliation Act, 1996.
- The place of arbitration shall be at DSJ and any award whether interim or final, shall be made, and shall be deemed for all purposes between the parties to be made in Delhi.
- Any notice given pursuant to this agreement shall be in writing and may be given by sending the same in a prepaid letter by registered post addresses to the party concerned at his address as given in this agreement or at such other address as such party may have noticed in writing to the other party or the company hereto for the purpose and any notice so given shall be deemed to have been served forty-eight hours after it was posted or as the case may be at the time it was delivered as aforesaid.
- And finally, get the signature of or on behalf of both the parties in bottom right corner of the agreement and also under that we have to get two eligible witnesses on the bottom left corner at last.
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